Teleflex (TFX)

We are focused on achieving consistent and sustainable growth
through the development of new products, expansion of market
share, moving existing products into new geographies, and
through selected acquisitions which enhance or expedite our
development initiatives and our ability to increase market
share. The discussion of growth from acquisitions included below
reflects the impact of a purchased company up to twelve months
from the date of acquisition. Activity after the initial twelve
months is considered core growth. Core growth excludes the
impact of translating the results of international subsidiaries
at different currency exchange rates from year to year and the
comparable activity of divested companies within the most recent
twelve-month period.

Comparison
of the three and nine month periods ended September 28,
2008 and September 30, 2007

Revenues increased approximately 30% in the third quarter of
2008 to $595.9 million from $458.6 million in the same
period of a year ago. Businesses acquired in 2007 were
responsible for the entire increase. Revenue from core
businesses declined 4% during the quarter which was largely
offset by a 3% favorable impact on revenues from foreign
currency translation. For the first nine months of 2008,
revenues increased approximately 35% to $1.8 billion from
$1.4 billion in the first nine months of 2007. Businesses
acquired in the past twelve months contributed 34% to this
increase in revenues and foreign currency translation
contributed 4% to revenue growth, while revenues from core
business declined 2% and divestitures reduced revenues by
another 1%. Core revenue decline in the third quarter and first
nine months of 2008 was primarily due to a significant decrease
in sales volume for auxiliary power units sold into the North
American truck market and sales of recreational marine products,
and to a lesser extent, weaker sales of surgical and critical
care products in North America.

Gross profit as a percentage of revenues increased to 40.1% in
the third quarter of 2008 from 33.6% in the third quarter of
2007. For the first nine months of 2008, gross profit as a
percentage of revenues increased to 40.0% compared to 35.4% for
the nine months of 2007. For both the three month and nine month
periods, the increases were largely due to the addition of
higher margin Arrow critical care product lines and improved
margins in the Aerospace Segments engine repairs business.
Selling, engineering and administrative expenses (operating
expenses) as a percentage of revenues were 24.2% for the three
months ended September 28, 2008 compared to 20.9% for the
three months ended September 30, 2007 and 25.2% for the
first nine months of 2008 compared to 22.0% for the first nine
months of 2007, principally due to the acquisition of Arrow.

24

Interest expense increased significantly in the third quarter
and first nine months of 2008 compared to the same periods in
2007 principally as a result of the debt incurred in connection
with the Arrow acquisition. Interest income decreased in the
third quarter and first nine months of 2008 compared to the same
periods in 2007 primarily due to lower amounts of invested funds
combined with lower average interest rates. The effective tax
rate for the three months ending September 28, 2008 was
20.9% compared to 215.9% for the corresponding prior year
period. For the nine months ending September 28, 2008 the
effective tax rate was 24.2% compared to 83.8% for the
corresponding prior year period. The rate decrease in both
periods reflects the discrete income tax charge in the third
quarter of 2007 of approximately $90.2 million in
anticipation of the Arrow acquisition. Specifically, in
connection with funding the acquisition of Arrow, the Company
(i) repatriated approximately $197.0 million of cash
from foreign subsidiaries which had previously been deemed to be
permanently reinvested in the respective foreign jurisdictions;
and (ii) changed its position with respect to certain
additional previously untaxed foreign earnings to treat these
earnings as no longer permanently reinvested. Minority interest
in consolidated subsidiaries increased $2.4 million and
$4.8 million in the third quarter and first nine months of
2008, respectively compared to the same periods in 2007 due to
increased profits during the third quarter of 2008 from
consolidated entities that are not wholly-owned.

In connection with the acquisition of Arrow, we have formulated
a plan related to the future integration of Arrow and our
Medical businesses. The integration plan focuses on the closure
of Arrow corporate functions and the consolidation of
manufacturing, sales, marketing and distribution functions in
North America, Europe and Asia. Costs related to actions that
affect employees and facilities of Arrow have been included in
the allocation of the purchase price of Arrow. Costs related to
actions that affect employees and facilities of Teleflex are
charged to earnings and included in restructuring and impairment
charges within the condensed consolidated statement of
operations. These costs amounted to approximately
$0.4 million and $11.2 million during the three and
nine months ended September 28, 2008, respectively. As of
September 28, 2008, we estimate that the aggregate of
future restructuring and impairment charges that we will incur
are approximately $22.0  $25.0 million in 2008
and 2009 in connection with the Arrow integration plan. Of this
amount, $10.3  $11.3 million relates to employee
termination costs, $10.5  $11.5 million relates
to costs associated with the termination of leases and certain
distribution agreements and $1.2  $2.2 million
relates to other restructuring costs. The Company has also
incurred restructuring related costs in the Medical Segment
which do not qualify for classification as restructuring costs.
For the three and nine months ended September 28, 2008,
these costs amounted to $2.1 million and $5.9 million,
respectively and are reported in the results of the Medical
Segments operating profit in selling, engineering and
administrative expenses.

In June 2006, we began certain restructuring initiatives that
affect all three of our operating segments. These initiatives
involved the consolidation of operations and a related reduction
in workforce at several of our facilities in Europe and North
America. We determined to undertake these initiatives to improve
operating performance and to better leverage our existing
resources. The charges, including changes in estimates,
associated with the 2006 restructuring program that are included
in restructuring and impairment charges within the condensed
consolidated statement of operations amounted to approximately
$38 thousand and $1.1 million for the three month periods
ended September 28, 2008 and September 30, 2007,
respectively and $705 thousand and $2.0 million for the
nine month periods ended September 28, 2008 and
September 30, 2007, respectively. As of September 28,
2008, we expect to incur approximately $228 thousand in contract
termination costs under our 2006 restructuring program.

For additional information regarding our restructuring programs,
see Note 4 to our Condensed Consolidated Financial
Statements included in this report.

We are focused on achieving consistent and sustainable growth
through the development of new products, expansion of market
share, moving existing products into new geographies, and
through selected acquisitions which enhance or expedite our
development initiatives and our ability to increase market
share. The discussion of growth from acquisitions included below
reflects the impact of a purchased company up to twelve months
beyond the date of acquisition. Activity beyond the initial
twelve months is considered core growth. Core growth excludes
the impact of translating the results of international
subsidiaries at different currency exchange rates from year to
year and the comparable activity of divested companies within
the most recent twelve-month period.

Comparison
of the three and six month periods ended June 29, 2008 and
July 1, 2007

Revenues increased approximately 38% in the second quarter of
2008 to $624.1 million from $452.3 million in the same
period of a year ago. Businesses acquired in 2007 contributed
34% to this increase in revenues and foreign currency benefited
revenue growth by 4%. Core revenue growth was flat for the
second quarter. For the first six months of 2008, revenues
increased approximately 38% to $1.2 billion from
$0.9 billion in the first six months of 2007. Businesses
acquired in the past twelve months contributed 35% to this
increase in revenues and foreign currency contributed 5% to
revenue growth, while revenues from core business declined 1%
and divestitures reduced revenues another 1%. Core revenue
decline in the first six months of 2008 was primarily due to a
significant decrease in sales volume for auxiliary power units
sold into the North American truck market, and to a lesser
extent, weaker sales of certain recreational marine products in
North America, when compared to the corresponding prior year
periods.

Gross profit as a percentage of revenues increased to 41.4% in
the second quarter of 2008 from 36.1% in the second quarter of
2007. For the first six months of 2008, gross profit as a
percentage of revenues increased to 40.0% compared to 36.4% for
the six months of 2007. For both the three month and six month
periods, the increases were largely due to the addition of
higher margin Arrow critical care product lines and improved
margins in the Aerospace Segments engine repairs business.
Selling, engineering and administrative expenses (operating
expenses) as a percentage of revenues were 26.1% for the three
months ended June 29, 2008 compared to 22.9% for the three
months ended July 1, 2007 and 25.6% for the first six
months of 2008 compared to 22.6% for the first six months of
2007, principally due to the acquisition of Arrow.

Interest expense increased significantly in the second quarter
and first six months of 2008 compared to the same periods in
2007 principally as a result of the debt incurred in connection
with the Arrow acquisition. Interest

24

income decreased in the second quarter and first six months of
2008 compared to the same periods in 2007 primarily due to lower
amounts of invested funds combined with lower average interest
rates. The effective tax rate for the three months ending
June 29, 2008 was 24.7% compared to 18.7% for the
corresponding prior year period. For the six months ending
June 29, 2008 the effective tax rate was 26.3% compared to
22.7% for the corresponding prior year period. The rate increase
in both periods reflects a higher concentration of US taxable
income in 2008 due to the Arrow acquisition and the impact of a
tax credit for research and development in 2007. Minority
interest in consolidated subsidiaries increased
$2.4 million in the second quarter and first six months of
2008 compared to the same periods in 2007 due to increased
profits during the second quarter of 2008 from consolidated
entities that are not wholly-owned.

In connection with the acquisition of Arrow, we have formulated
a plan related to the future integration of Arrow and our
Medical businesses. The integration plan focuses on the closure
of Arrow corporate functions and the consolidation of
manufacturing, sales, marketing, and distribution functions in
North America, Europe and Asia. In as much as the actions affect
employees and facilities of Arrow, the resultant costs have been
included in the allocation of the purchase price of Arrow. Costs
related to actions that affect employees and facilities of
Teleflex are charged to earnings and included in
restructuring and impairment charges within the
condensed consolidated statement of operations and amounted to
approximately $2.6 million and $11.4 million during
the three and six months ended June 29, 2008, respectively.
As of June 29, 2008, we expect to incur future
restructuring costs of between $18.4 
$21.4 million when actions are taken or costs are incurred
in 2008 and 2009 in connection with this plan. Of this amount,
$6.4  $7.4 million relates to employee
termination costs, $10.5  $11.5 million relates
to lease termination costs as well as termination of certain
distribution agreements and $1.5  $2.5 million
relates to other restructuring costs. In connection with the
Arrow integration and restructuring activities, the Company has
incurred restructuring related costs in the Medical Segment
which do not qualify as restructuring costs. These costs are
reported in the results of the Medical Segments operating
profit in selling, engineering and administrative expenses.

In June 2006, we began certain restructuring initiatives that
affect all three of our operating segments. These initiatives
involve the consolidation of operations and a related reduction
in workforce at several of our facilities in Europe and North
America. We determined to undertake these initiatives to improve
operating performance and to better leverage our existing
resources. The charges, including changes in estimates,
associated with the 2006 restructuring program that are included
in restructuring and impairment charges resulted in a credit of
$143 thousand and a charge of $849 thousand for the three month
periods ended June 29, 2008 and July 1, 2007,
respectively and charges of $667 thousand and $919 thousand for
the six month periods ended June 29, 2008 and July 1,
2007, respectively. As of June 29, 2008, future
restructuring costs associated with our 2006 restructuring
program are related to contract termination costs of
approximately $266 thousand.

For additional information regarding our restructuring programs,
see Note 4 to our Condensed Consolidated Financial
statements included in this report.

Discussion of growth from acquisitions reflects the impact of a
purchased company up to twelve months beyond the date of
acquisition. Activity beyond the initial twelve months is
considered core growth. Core growth excludes the impact of
translating the results of international subsidiaries at
different currency exchange rates from year to year and the
comparable activity of divested companies within the most recent
twelve-month period.

Comparison
of the three months ended March 30, 2008 and April 1,
2007

Revenues increased approximately 37% in the first quarter of
2008 to $604.5 million from $440.3 million in the same
period of a year ago. We are focused on achieving consistent and
sustainable growth through the development of new products,
expansion of market share, moving existing products into new
geographies, and through selected acquisitions which enhance or
expedite our development initiatives and our ability to grow
market share. When compared with the same period last year,
businesses acquired in 2007 contributed 36% to revenue growth
and foreign currency benefited revenue growth by 4%. These
increases were partially offset by a 1% negative impact from
divestitures and a 2% decline in core revenues. Core revenues
declined primarily due to a dramatic decrease in sales volume
for auxiliary power units sold into the North American truck
market, and to a lesser extent, weaker sales of certain medical
products in North America.

Gross profit as a percentage of revenues increased to 38.5% in
the first quarter of 2008 from 36.7% in the first quarter of
2007 largely due to the addition of higher margin Arrow critical
care product lines. Selling, engineering and administrative
expenses (operating expenses) as a percentage of revenues were
25.0% for the first three months of 2008 compared to 22.3% for
the first three months of 2007, principally due to the
acquisition of Arrow.

Interest expense increased significantly in the first quarter of
2008 compared to the same period in 2007 principally as a result
of the debt incurred in correction with the Arrow acquisition.
Interest income decreased in the first quarter of 2008 compared
to the same period in 2007 primarily due to lower amounts of
invested funds combined with lower average interest rates. The
higher effective tax rate for the three months ending
March 30, 2008 of 28.7% compared to the rate of 26.4%
during the same period in 2007 reflected the absence of the
availability of a tax credit for research and development in
2008. Minority interest in consolidated subsidiaries was
essentially unchanged from the same period in 2007 reflecting
insignificant year on year change in profits from consolidated
entities that are not wholly-owned.

In connection with the acquisition of Arrow, the Company has
formulated a plan related to the future integration of Arrow and
the Companys Medical businesses. The integration plan
focuses on the closure of Arrow corporate functions and the
consolidation of manufacturing, sales, marketing, and
distribution functions in North America, Europe and Asia. In as
much as the actions affect employees and facilities of Arrow,
the resultant costs have been included in the allocation of the
purchase price of Arrow. Costs related to actions that affect
employees and facilities of Teleflex are charged to earnings and
included in restructuring and impairment charges
within the condensed consolidated statement of operations and
amounted to approximately $8.0 million during the three
months ended March 30, 2008. As of March 30, 2008, the
Company expects to incur future restructuring costs of between
$18.0  $22.0 million when actions are taken or
costs are incurred in 2008 and 2009 in connection with this
plan. Of this amount, $5.5  $7.0 million relates
to employee termination costs, $1.5 
$2.5 million relates to

facility closure costs and $11.0  $12.5 million
relates to lease termination costs as well as termination of
certain distribution agreements and other actions.

In June 2006, we began certain restructuring initiatives that
affect all three of our operating segments. These initiatives
involve the consolidation of operations and a related reduction
in workforce at several of our facilities in Europe and North
America. We have determined to undertake these initiatives as a
means to improving operating performance and to better leverage
our existing resources. The charges, including changes in
estimates, associated with the 2006 restructuring program that
are included in restructuring and impairment charges during the
first three months of both 2008 and 2007 approximated
$0.8 million and $0.1 million, respectively. As of
March 30, 2008, we expect to incur future restructuring
costs associated with our 2006 restructuring program of between
$0.7 million and $1.0 million in our Medical Segment
through the third quarter of 2008.

For additional information regarding our restructuring programs,
see Note 4 to our condensed consolidated financial
statements included in this Quarterly Report on
Form 10-Q.

Discussion of growth from acquisitions reflects the impact of a
purchased company up to twelve months beyond the date of
acquisition. Activity beyond the initial twelve months is
considered core growth. Core growth excludes the impact of
translating the results of international subsidiaries at
different currency exchange rates from year to year and the
comparable activity of divested companies within the most recent
twelve-month period. The following comparisons exclude the
impact of the TAMG business and a small medical business, which
have been presented in our condensed consolidated financial
results as discontinued operations.

Comparison
of the three and nine months ended September 30, 2007 and
September 24, 2006

Revenues increased approximately 8% in the third quarter of 2007
to $656.1 million from $605.5 million in the third
quarter of 2006. This increase was due to core growth, currency
movements and acquisitions of 3%, 3% and 2%, respectively.
Revenues increased approximately 8% in the first nine months of
2007 to $2.0 billion from $1.86 billion in the first
nine months of 2006. This increase was due to an increase of 3%
from core growth, 3% from currency movements and 2% from
acquisitions. The Commercial, Medical and Aerospace segments
comprised 48%, 35% and 17% of our revenues, respectively, for
the three months ended September 30, 2007 and comprised
49%, 34% and 17% of our revenues, respectively, for the first
nine months of 2007.

Gross profit as a percentage of revenues declined to 29.5% in
the third quarter of 2007 from 29.8% in the third quarter of
2006 largely due to approximately $4 million in provisions
for warranty and other costs related to prior generation
auxiliary power units sold to the North American truck market
and to approximately $0.8 million of one-time purchase
accounting adjustments in the Commercial Segment. Selling,
engineering and administrative expenses (operating expenses) as
a percentage of revenues were 19.7% for the first nine months of
2007 compared to 19.5% for the first nine months of 2006, and
were 19.3% of revenues in the third quarter of 2007 compared to
18.6% during the same period of a year ago. Higher operating
expenses were primarily attributable to engineering expense in
advance of new product launches in businesses serving the
marine, automotive and industrial markets, startup costs of a
Medical Segment European Shared Services center, quality
assurance investments made in the Medical Segment and the impact
of acquisitions and currency movements.

Interest expense declined slightly in the third quarter and
first nine months of 2007 principally as a result of lower debt
balances. Interest income increased in the third quarter and
first nine months of 2007 primarily due to higher amounts of
invested funds. The higher effective tax rate for the three and
nine months ending September 30, 2007, reflected discrete
income tax charges incurred in anticipation of the Arrow
acquisition. Specifically, in connection with funding the
acquisition of Arrow, the Company (i) repatriated
approximately $197.0 million of cash from foreign
subsidiaries which had previously been deemed to be permanently
reinvested in the respective foreign jurisdictions; and
(ii) changed its position with respect to certain
additional previously untaxed foreign earnings to treat these
earnings as no longer permanently reinvested. These items
resulted in a discrete income tax charge in the third quarter of
2007 of approximately $90.2 million. Also, the Company
remeasured certain deferred tax assets and liabilities as a
result of changes in enacted tax rates, resulting in the
recognition of a tax benefit of approximately $2.8 million
during the third quarter of 2007. Minority interest in
consolidated subsidiaries increased $1.1 million and
$4.2 million in the third quarter and first nine months of
2007, respectively, due to increased profits from consolidated
entities that are not wholly-owned. Loss from continuing
operations for the third quarter of 2007 was $56.8 million,
compared to income from continuing operations of
$34.7 million for the third quarter of 2006,

reflecting the discrete charges to income tax expense in the
third quarter of 2007. Income from continuing operations for the
first nine months of 2007 was $29.2 million, a decrease of
$67.0 million from the first nine months of 2006. Loss per
share from continuing operations was ($1.44) in the third
quarter of 2007 compared to diluted earnings per of $0.88 from
the third quarter of 2006. Diluted earnings per share from
continuing operations for the nine months ended
September 30, 2007 was $0.74 a decrease of $1.65 from the
comparable period last year.

We adopted the provisions of FASB Interpretation, or FIN,
No. 48 Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement
No. 109 on January 1, 2007. FIN No. 48
clarifies the accounting for uncertainty in income taxes
recognized in an enterprises financial statements in
accordance with Statement of Financial Accounting Standards, or
SFAS, No. 109, Accounting for Income Taxes.
FIN No. 48 requires that the impact of a tax position
be recognized in the financial statements if it is more likely
than not that the tax position will be sustained on tax audit,
based on the technical merits of the position.
FIN No. 48 also provides guidance on derecognition of
tax positions that do not meet the more likely than
not standard, classification of tax assets and
liabilities, interest and penalties, accounting in interim
periods, disclosure and transition. In connection with our
adoption of the provisions of FIN No. 48, we
recognized a charge of approximately $13.2 million to
retained earnings.

For additional information regarding our uncertain tax
positions, see Note 11 to our condensed consolidated
financial statements included in this Quarterly Report on
Form 10-Q.

In June 2006, we began certain restructuring initiatives that
affect all three of our operating segments. These initiatives
involve the consolidation of operations and a related reduction
in workforce at several of our facilities in Europe and North
America. We have determined to undertake these initiatives as a
means to improving operating performance and to better leverage
our existing resources. The charges, including changes in
estimates, associated with the 2006 restructuring program that
are included in restructuring and impairment charges during the
first nine months of both 2007 and 2006 approximated
$2.6 million, respectively. As of September 30, 2007,
we expect to incur future restructuring costs associated with
our 2006 restructuring program of between $3.0 million and
$4.0 million in our Commercial, Medical and Aerospace
segments through the second quarter of 2008.

During the first quarter of 2006, we began a restructuring
activity in our Aerospace Segment. The actions related to the
closure of a manufacturing facility, termination of employees
and relocation of operations. No charges associated with this
activity were included in restructuring and impairment charges
during the third quarter and first nine months of 2007. The
charges, including changes in estimates, associated with this
activity that are included in restructuring and impairment
charges during the third quarter first nine months of 2006
totaled $0.3 million and $0.6 million, respectively.
We do not expect to incur any additional restructuring costs
associated with this activity.

For additional information regarding our restructuring programs,
see Note 4 to our condensed consolidated financial
statements included in this Quarterly Report on
Form 10-Q.

Discussion of growth from acquisitions reflects the impact of a
purchased company up to twelve months beyond the date of
acquisition. Activity beyond the initial twelve months is
considered core growth. Core growth excludes the impact of
translating the results of international subsidiaries at
different currency exchange rates from year to year and the
comparable activity of divested companies within the most recent
twelve-month period. The following comparisons exclude the
impact of the TAMG business and a small medical business, which
have been presented in our condensed consolidated financial
results as discontinued operations.

Comparison
of the three and six months ended July 1, 2007 and
June 25, 2006

Revenues increased 4.5% in the second quarter of 2007 to
$679.7 million from $650.2 million in the second
quarter of 2006. This increase was due entirely to currency
movements and acquisitions. Revenues increased 7.8% in the first
six months of 2007 to $1.35 billion from
$1.25 billion in the first six months of 2006. This
increase was due to an increase of 4% from core growth, 3% from
currency movements and 1% from acquisitions. The Commercial,
Medical and Aerospace segments comprised 51%, 33% and 16% of our
revenues, respectively, for both the second quarter and first
six months of 2007.

Gross profit as a percentage of revenues improved to 31.3% in
the second quarter of 2007 from 30.3% in the second quarter of
2006. Selling, engineering and administrative expenses
(operating expenses) as a percentage of revenues were 19.9% for
the first six months of 2007 and 2006, respectively, however
they were 20.2% of revenues in the second quarter of 2007
compared to 19.6% during the same period of a year ago. Higher
operating expenses were primarily attributable to engineering
costs in connection with new automotive and marine platforms,
startup costs of a European Shared Services center, quality
assurance investments made in the Medical Segment and higher
Corporate expenses during the second quarter of 2007.

Interest expense declined in the second quarter and first six
months of 2007 principally as a result of lower debt balances.
Interest income increased in the second quarter and first six
months of 2007 primarily due to higher amounts of invested
funds. The effective income tax rate was 22.6% and 25.8% in the
second quarter and first six months of 2007, respectively,
compared with 20.2% and 23.7% in the second quarter and first
six months of 2006, respectively. The lower effective tax rate
in the second quarter of 2006, reflected a correction of
$6.4 million related to tax balance sheet accounts that
were incorrectly stated as a result of discrete errors in our
tax accounting analyses and computations in prior periods.
Minority interest in consolidated subsidiaries increased
$1.3 million and $3.1 million in the second quarter
and first six months of 2007, respectively, due to
increased profits from consolidated entities that are not
wholly-owned. Income from continuing operations for the second
quarter of 2007 was $43.0 million, an increase of 26.5%
from the second quarter of 2006. Income from continuing
operations for the first six months of 2007 was
$86.1 million, an increase of 39.9% from the first six
months of 2006. Diluted earnings per share from continuing
operations increased 28.6% to $1.08 for the second quarter of
2007 and increased 43.4% to $2.18 for the first six months of
2007.

We adopted the provisions of FASB Interpretation, or FIN,
No. 48 Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement
No. 109 on January 1, 2007. FIN No. 48
clarifies the accounting for uncertainty in income taxes
recognized in an enterprises financial statements in
accordance with Statement of Financial Accounting Standards, or
SFAS, No. 109, Accounting for Income Taxes.
FIN No. 48 requires that the impact of a tax position
be recognized in the financial statements if it is more likely
than not that the tax position will be sustained on tax audit,
based on the technical merits of the position.
FIN No. 48 also provides guidance on derecognition of
tax positions that do not meet the more likely than
not standard, classification of tax assets and
liabilities, interest and penalties, accounting in interim
periods, disclosure and transition. In connection with our
adoption of the provisions of FIN No. 48, we
recognized a charge of approximately $13.2 million to
retained earnings.

For additional information regarding more complete discussion of
our uncertain tax positions, see Note 11 to our condensed
consolidated financial statements included in this Quarterly
Report on
Form 10-Q.

In June 2006, we began certain restructuring initiatives that
affect all three of our operating segments. These initiatives
involve the consolidation of operations and a related reduction
in workforce at several of our facilities in

18

Europe and North America. We have determined to undertake these
initiatives as a means to improving operating performance and to
better leverage our existing resources. The charges, including
changes in estimates, associated with the 2006 restructuring
program that are included in restructuring and impairment
charges during the second quarter of 2007 and 2006 totaled
$0.9 million and $1.8 million, respectively. As of
July 1, 2007, we expect to incur future restructuring costs
associated with our 2006 restructuring program of between
$4.2 million and $5.8 million in our Commercial,
Medical and Aerospace segments during 2007.

During the first quarter of 2006, we began a restructuring
activity in our Aerospace Segment. The actions related to the
closure of a manufacturing facility, termination of employees
and relocation of operations. The charges, including changes in
estimates, associated with this activity that are included in
restructuring and impairment charges during the second quarter
of 2007 and 2006 totaled $0 and $0.1 million, respectively.
The charges, including changes in estimates, associated with
this activity that are included in restructuring and impairment
charges during the first six months of 2007 and 2006 totaled $0
and $0.3 million, respectively. We do not expect to incur
any additional restructuring costs associated with this activity.

During the fourth quarter of 2004, we announced and commenced
implementation of a restructuring and divestiture program
designed to improve future operating performance and position us
for future earnings growth. The actions have included exiting or
divesting non-core or low performing businesses, consolidating
manufacturing operations and reorganizing administrative
functions to enable businesses to share services. The charges,
including changes in estimates, associated with the 2004
restructuring and divestiture program for continuing operations
that are included in restructuring and impairment charges during
the second quarter and first six months of 2007 totaled
$0.2 million and $0.6 million, respectively, and were
attributable to our Medical Segment. As of July 1, 2007, we
expect to incur future restructuring costs associated with our
2004 restructuring and divestiture program of between
$0.1 million and $0.2 million in our Medical Segment
during 2007.

For additional information regarding our restructuring programs,
see Note 4 to our condensed consolidated financial
statements included in this Quarterly Report on
Form 10-Q.

Discussion of growth from acquisitions reflects the impact of a
purchased company up to twelve months beyond the date of
acquisition. Activity beyond the initial twelve months is
considered core growth. Core growth excludes the impact of
translating the results of international subsidiaries at
different currency exchange rates from year to year and the
comparable activity of divested companies within the most recent
twelve-month period. The following comparisons exclude the
impact of the TAMG business and a small medical business, which
have been presented in our condensed consolidated financial
results as discontinued operations.

Revenues increased 11% in the first quarter of 2007 to
$667.3 million from $599.9 million in the first
quarter of 2006. The increase was due to increases of 8% from
core growth and 3% from currency. The Commercial, Medical and
Aerospace segments comprised 49%, 34% and 17% of our first
quarter 2007 revenues, respectively.

Materials, labor and other product costs as a percentage of
revenues improved to 68.6% in the first quarter of 2007 from
70.2% in the first quarter of 2006. Selling, engineering and
administrative expenses (operating expenses) as a percentage of
revenues improved to 19.6% in the first quarter of 2007 from
20.2% in the first quarter of 2006. These improvements were due
primarily to the correction of various temporary operational
inefficiencies in our Medical Segment that occurred in the first
half of 2006, the benefits of our restructuring initiatives and
other cost reduction efforts.

Interest expense declined in the first quarter of 2007
principally as a result of lower debt balances. Interest income
declined in the first quarter of 2007 primarily due to less
favorable interest rates compared to the prior period. The
effective income tax rate was 28.70% in the first quarter of
2007 compared with 27.61% in the first quarter of 2006. Minority
interest in consolidated subsidiaries increased
$1.8 million in the first quarter of 2007, due to increased
profits from our entities that are not wholly-owned. Net income
for the first quarter of 2007 was $44.3 million compared to
$29.1 million for the first quarter of 2006. Diluted
earnings per share increased 56% to $1.12 for the first quarter
of 2007.

We adopted the provisions of Interpretation, or FIN, No. 48
Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement No. 109. on
January 1, 2007. FIN No. 48 clarifies the
accounting for uncertainty in income taxes recognized in an
enterprises financial statements in accordance with
Statement of Financial Accounting Standards, or SFAS,
No. 109, Accounting for Income Taxes.
FIN No. 48 requires that the impact of a tax position
be recognized in the financial statements if it is more likely
than not that the tax position will be sustained on tax audit,
based on the technical merits of the position.
FIN No. 48 also provides guidance on derecognition of
tax positions that do not meet the more likely than
not standard, classification of tax assets and
liabilities, interest and penalties, accounting in interim
periods, disclosure and transition. In connection with our
adoption of the provisions of FIN No. 48, we
recognized a charge of approximately $13.2 million to
retained earnings.

For a more complete discussion of our uncertain tax positions,
see Note 11 to our condensed consolidated financial
statements included in this Quarterly Report on
Form 10-Q.

In June 2006, we began certain restructuring initiatives that
affect all three of our operating segments. These initiatives
involve the consolidation of operations and a related reduction
in workforce at several of our facilities in Europe and North
America. We have determined to undertake these initiatives as a
means to improving operating performance and to better leverage
our existing resources. The charges, including changes in
estimates, associated with the 2006 restructuring program that
are included in restructuring and impairment charges during the
first quarter of 2007 totaled $0.1 million. As of
April 1, 2007, we expect to incur future restructuring
costs associated with our 2006 restructuring program of between
$6.6 million and $9.0 million in our Commercial,
Medical and Aerospace segments during 2007.

During the first quarter of 2006, we began a restructuring
activity in our Aerospace Segment. The actions related to the
closure of a manufacturing facility, termination of employees
and relocation of operations. The charges associated with this
activity that are included in restructuring and impairment
charges during the first quarter of 2007 and the first quarter
of 2006 totaled $0 and $0.2 million, respectively. We do
not expect to incur future restructuring costs associated with
this activity.

During the fourth quarter of 2004, we announced and commenced
implementation of a restructuring and divestiture program
designed to improve future operating performance and position us
for future earnings growth. The actions have included exiting or
divesting non-core or low performing businesses, consolidating
manufacturing operations and reorganizing administrative
functions to enable businesses to share services. The charges,
including changes in estimates, associated with the 2004
restructuring and divestiture program for continuing operations
that are included in restructuring and impairment charges during
the first quarter of 2007 and the first quarter of 2006 totaled
$0.4 million and $4.3 million, respectively, and were
attributable to our Medical Segment. As of April 1,

Discussion of growth from acquisitions reflects the impact of a
purchased company up to twelve months beyond the date of
acquisition. Activity beyond the initial twelve months is
considered core growth. Core growth excludes the impact of
translating the results of international subsidiaries at
different currency exchange rates from year to year, the impact
of eliminating the one-month reporting lag for certain of our
foreign operations and the comparable activity of divested
companies within the most recent twelve-month period. The
following comparisons exclude the impact of the automotive pedal
systems business, Sermatech International business, European
medical product sterilization business and small medical
business, which have been presented in our consolidated
financial results as discontinued operations.

Materials, labor and other product costs as a percentage of
revenues improved to 70.7% in 2006 from 71.8% in 2005, due
primarily to the benefits of our restructuring initiatives and
other cost reduction efforts. Selling, engineering and
administrative expenses (operating expenses) as a percentage of
revenues increased to 18.6% in 2006 compared with 17.9% in 2005,
due primarily to $10.4 million of costs associated with the
initial phases of an information systems implementation program
in our Medical Segment, $6.8 million of stock-based
compensation expensed under SFAS No. 123(R) and
various temporary inefficiencies in our Medical Segment during
the first half of 2006.

Interest expense declined in 2006 principally as a result of
lower debt balances. Interest income increased in 2006 primarily
due to higher average cash balances and more favorable interest
rates compared to the prior period. The effective income tax
rate was 24.72% in 2006 compared with 22.99% 2005. The increase
in the effective income tax rate primarily reflects the
favorable impact in 2005 of the American Jobs Creation Act, or
AJCA, repatriation benefit. Minority interest in consolidated
subsidiaries increased $4.6 million in 2006 due to
increased profits from our entities that are not wholly-owned.
Net income for 2006 was $139.4 million compared to
$138.8 million for 2005. Diluted earnings per share
increased 3% to $3.49 for 2006.

On December 26, 2005, we adopted the provisions of
SFAS No. 123(R), Share-Based Payment,
which requires the measurement and recognition of compensation
expense for all stock-based awards made to employees based on
estimated fair values. SFAS No. 123(R) supersedes
previous accounting under Accounting Principles Board, or APB,
Opinion No. 25, Accounting for Stock Issued to
Employees, for periods beginning in fiscal 2006. In March
2005, the SEC issued Staff Accounting Bulletin, or SAB,
No. 107, providing supplemental implementation guidance for
SFAS 123(R). We have applied the provisions of
SAB No. 107 in our adoption of
SFAS No. 123(R).

SFAS No. 123(R) requires companies to estimate the
fair value of stock-based awards on the date of grant using an
option pricing model. The value of the portion of the award that
is ultimately expected to vest is recognized as expense over the
requisite service periods. We adopted SFAS No. 123(R)
using the modified prospective application method, which
requires the application of the standard starting from
December 26, 2005, the first day of our 2006 fiscal year.
Our consolidated financial statements for 2006 reflect the
impact of SFAS No. 123(R).

Stock-based compensation expense related to employee stock
options recognized under SFAS No. 123(R) for 2006 was
$6.8 million and is included in selling, engineering and
administrative expenses. The total income tax benefit recognized
for share-based compensation arrangements for 2006 was
$1.4 million. As of December 31, 2006, total
unamortized stock-based compensation cost related to non-vested
stock options, net of expected forfeitures, was
$9.2 million, which is expected to be recognized over a
weighted-average period of 1.9 years.

Prior to the adoption of SFAS No. 123(R), we accounted
for stock-based awards to employees using the intrinsic value
method in accordance with APB No. 25, as allowed under
SFAS No. 123, Accounting for Stock-Based
Compensation. Under the intrinsic value method, no
stock-based compensation expense for employee stock options had
been recognized in our consolidated statements of operations
because the exercise price of our stock options granted to
employees equaled the fair market value of the underlying stock
at the date of grant. In accordance with the modified
prospective transition method we used in adopting
SFAS No. 123(R), our results of operations prior to
fiscal 2006 have not been restated to reflect, and do not
include, the impact of SFAS No. 123(R).

Additional information regarding stock-based compensation and
our stock compensation plans is presented in Notes 1 and 11
to our consolidated financial statements included in this Annual
Report on
Form 10-K.

In June 2006, we began certain restructuring initiatives that
affect all three of our operating segments. These initiatives
involve the consolidation of operations and a related reduction
in workforce at several of our facilities in Europe and North
America. We have determined to undertake these initiatives as a
means to improving operating performance and to better leverage
our existing resources. The charges associated with the 2006
restructuring program that are included in restructuring and
impairment charges during 2006 totaled $5.9 million, of
which 55%, 26% and 19% were attributable to our Commercial,
Medical and Aerospace segments, respectively. As of
December 31, 2006, we expect to incur future restructuring
costs associated with our 2006 restructuring program of between
$3.0 million and $5.4 million in our Commercial,
Medical and Aerospace segments over the next two quarters.

During the first quarter of 2006, we began a restructuring
activity in our Aerospace Segment. The actions relate to the
closure of a manufacturing facility, termination of employees
and relocation of operations. The charges associated with this
activity that are included in restructuring and impairment
charges during 2006 totaled $0.6 million. We do not expect
to incur future restructuring costs associated with this
activity.

During the fourth quarter of 2004, we announced and commenced
implementation of a restructuring and divestiture program
designed to improve future operating performance and position us
for future earnings growth. The actions have included exiting or
divesting non-core or low performing businesses, consolidating
manufacturing operations and reorganizing administrative
functions to enable businesses to share services. The charges,
including changes in estimates, associated with the 2004
restructuring and divestiture program for continuing operations
that are included in restructuring and impairment charges during
2006, 2005 and 2004 totaled $10.4 million,
$27.1 million and $67.6 million, respectively. The
$10.4 million was attributable to our Medical Segment. Of
the $27.1 million, 13%, 76% and 11% were attributable to
our Commercial, Medical and Aerospace segments, respectively. Of
the $67.6 million, 31%, 15% and 54% were attributable to
our Commercial, Medical and Aerospace segments, respectively. As
of December 31, 2006, we expect to incur future
restructuring costs associated with our 2004 restructuring and
divestiture program of between $1.6 million and
$3.2 million in our Medical Segment during 2007.

Certain costs associated with the 2004 restructuring and
divestiture program are not included in restructuring and
impairment charges. All inventory adjustments that resulted from
the 2004 restructuring and divestiture program and certain other
costs associated with closing out businesses during 2005 and
2004 are included in materials, labor and other product costs
and totaled $2.0 million and $17.0 million,
respectively. The $2.0 million in costs for 2005 related to
our Aerospace Segment. Of the $17.0 million in costs for
2004, $4.5 million and $12.5 million were attributed
to our Commercial and Aerospace segments, respectively.

The cost savings from our restructuring programs were lower than
expected in 2006 due primarily to implementation inefficiencies
in our Medical Segment during the first half of the year, but we
began to experience our anticipated rate of savings during the
second half of the year.

For a more complete discussion of our restructuring programs,
see Note 4 to our consolidated financial statements
included in this Annual Report on
Form 10-K.

We performed an annual impairment test of our recorded goodwill
and indefinite-lived intangible assets in the fourth quarter of
2006 and determined that a portion of our goodwill was impaired.
We recorded a charge of $1.0 million, which is included in
restructuring and impairment charges. Also during 2006, we
determined that three minority held investments and certain
fixed assets were impaired and recorded an aggregate charge of
$7.4 million, which is included in restructuring and
impairment charges.

Comparison of
2005 and 2004

Revenues increased 5% in 2005 to $2.51 billion from
$2.39 billion in 2004. This increase was due to increases
of 5% from core growth and 4% from acquisitions, offset, in
part, by decreases of 3% from dispositions and 1% from the
impact of eliminating the one-month reporting lag in 2004 for
certain of our foreign operations. The Commercial, Medical and
Aerospace segments comprised 47%, 33% and 20% of our 2005
revenues, respectively.

Materials, labor and other product costs as a percentage of
revenues increased to 71.8% in 2005 compared with 71.3% in 2004
due primarily to the impact of duplicate costs and
inefficiencies related to the transfer of products between
facilities in the Commercial Segment associated with the
restructuring program. Selling, engineering and administrative
expenses (operating expenses) as a percentage of revenues
declined to 17.9% in 2005 compared with 20.4% in 2004 due
primarily to the continuing reduction of facilities and
supporting infrastructure costs and decreased corporate expenses
relative to higher revenues.

Interest expense increased in 2005 principally from higher
acquisition related debt balances in the first half of 2005.
Interest income increased in 2005 primarily due to higher
average cash balances, related to increased proceeds received
from sales of businesses and assets in 2005. The effective
income tax rate was 22.99% in 2005 compared with 13.17% in 2004.
The higher rate in 2005 was primarily the result of the increase
in foreign earnings for businesses located in higher-taxed
jurisdictions. Minority interest in consolidated subsidiaries
increased $1.1 million in 2005 due to increased profits
from our entities that are not wholly-owned. Net income for 2005
was $138.8 million, an increase of $129.3 million from
2004, due primarily to a 60% decrease in restructuring costs and
to the gain on the sale of the Sermatech business. Diluted
earnings per share increased $3.15 to $3.39, and includes the
net gain on sales of businesses and assets and the cost of
restructuring and discontinued operations.

Discussion of growth from acquisitions reflects the impact of a
purchased company up to twelve months beyond the date of
acquisition. Activity beyond the initial twelve months is
considered core growth. Core growth excludes the impact of
translating the results of international subsidiaries at
different currency exchange rates from year to year and the
comparable activity of divested companies within the most recent
twelve-month period. The following comparisons exclude the
impact of the automotive pedal systems business, Sermatech
International business, European medical product sterilization
business and small medical business, which have been presented
in our condensed consolidated financial results as discontinued
operations.

Comparison
of the three and nine months ended September 24, 2006 and
September 25, 2005

Revenues increased 9% in the third quarter of 2006 to
$639.1 million from $587.4 million in the third
quarter of 2005. This increase was due to an increase of 6% from
core growth and an increase of 3% from currency. Revenues
increased 5% in the first nine months of 2006 to
$1.95 billion from $1.87 billion in the first nine
months of 2005, principally due to core growth. The Commercial,
Medical and Aerospace segments comprised 45%, 33% and 22% of our
third quarter 2006 revenues, respectively, and 48%, 32% and 20%
of our revenues for the first nine months of 2006, respectively.

Materials, labor and other product costs as a percentage of
revenues improved slightly to 71.0% in the third quarter of 2006
from 71.7% in the third quarter of 2005 and improved slightly to
70.8% in the first nine months of 2006 from 71.6% in the first
nine months of 2005. Selling, engineering and administrative
expenses (operating expenses) as a percentage of revenues
increased slightly to 18.0% in the third quarter of 2006
compared with 17.8% in the third quarter of 2005. Operating
expenses as a percentage of revenues increased to 18.8% in the
first nine months of 2006 compared with 18.1% in the first nine
months of 2005, due primarily to $8.6 million of costs
associated with the initial phases of an information systems
implementation program in our Medical Segment, delayed shipments
and costs associated with restructuring activities in our
Medical Segment during the first half of 2006 and the impact of
expensing stock options under SFAS No. 123(R).

Interest expense declined in the third quarter and first nine
months of 2006 principally as a result of lower debt balances.
Interest income increased in the third quarter of 2006 primarily
due to more favorable interest rates compared to the prior year
quarter and increased in the first nine months of 2006 primarily
due to higher average cash balances and more favorable interest
rates compared to the prior period. The effective income tax
rate was 26.99% and 25.40% in the third quarter and first nine
months of 2006, respectively, compared with 20.16% and 22.61% in
the third quarter and first nine months of 2005, respectively.
These increases in the effective income tax rate were primarily
the result of a higher proportion of income in the third quarter
and first nine months of 2006 earned in countries with
relatively higher tax rates. Minority interest in consolidated
subsidiaries increased $1.3 million and $3.0 million
in the third quarter and first nine months of 2006,
respectively, due to increased profits from our entities that
are not wholly-owned. Net income for the third quarter of 2006
was $36.0 million, an increase of 7% from the third quarter
of 2005, due primarily to increased operating profits in the
third quarter of 2006. Net income for the first nine months of
2006 was $101.7 million compared to $101.3 million in
the first nine months of 2005. Diluted earnings per share
increased 11% to $0.91 for the third quarter of 2006 and
increased 2% to $2.53 for the first nine months of 2006.

On December 26, 2005, we adopted the provisions of
SFAS No. 123(R), Share-Based Payment,
which requires the measurement and recognition of compensation
expense for all stock-based awards made to employees based on
estimated fair values. SFAS No. 123(R) supersedes
previous accounting under Accounting Principles Board, or APB,
Opinion No. 25, Accounting for Stock Issued to
Employees, for periods beginning in fiscal 2006. In March
2005, the SEC issued Staff Accounting Bulletin, or SAB,
No. 107, providing supplemental implementation guidance for
SFAS 123(R). We have applied the provisions of
SAB No. 107 in our adoption of
SFAS No. 123(R).

SFAS No. 123(R) requires companies to estimate the
fair value of stock-based awards on the date of grant using an
option pricing model. The value of the portion of the award that
is ultimately expected to vest is recognized as expense over the
requisite service periods. We adopted SFAS No. 123(R)
using the modified prospective application method, which
requires the application of the standard starting from
December 26, 2005, the first day of our 2006 fiscal year.
Our condensed consolidated financial statements for the third
quarter and first nine months of 2006 reflect the impact of
SFAS No. 123(R).

Stock-based compensation expense related to employee stock
options recognized under SFAS No. 123(R) for the third
quarter and first nine months of 2006 was $1.8 million and
$5.1 million, respectively, and is included in selling,
engineering and administrative expenses. The total income tax
benefit recognized for share-based compensation arrangements for
the third quarter and first nine months of 2006 was
$0.4 million and $1.1 million, respectively. As of
September 24, 2006, total unamortized stock-based
compensation cost related to non-vested stock options, net of
expected forfeitures, was $10.5 million, which is expected
to be recognized over a weighted-average period of
2.0 years.

Additional information regarding stock-based compensation and
our stock compensation plans is presented in Notes 1 and 9
to our condensed consolidated financial statements included in
this Quarterly Report on
Form 10-Q.

In June 2006, we began certain restructuring initiatives that
affect all three of our operating segments. These initiatives
involve the consolidation of operations and a related reduction
in workforce at several of our facilities in Europe and North
America. We have determined to undertake these initiatives as a
means to improving operating performance and to better leverage
our existing resources. The charges associated with the 2006
restructuring program that are included in restructuring and
impairment charges during the third quarter and first nine
months of

2006 totaled $0.8 million and $2.6 million,
respectively. Of the $0.8 million, 21% and 79% were
attributable to our Medical and Aerospace segments,
respectively. Of the $2.6 million, 18%, 57% and 25% were
attributable to our Commercial, Medical and Aerospace segments,
respectively. As of September 24, 2006, we expect to incur
future restructuring costs associated with our 2006
restructuring program of between $5.5 million and
$7.5 million in our Commercial, Medical and Aerospace
segments over the next three quarters.

During the first quarter of 2006, we began a restructuring
activity in our Aerospace Segment. The planned actions relate to
the closure of a manufacturing facility, termination of
employees and relocation of operations. The charges associated
with this activity that are included in restructuring and
impairment charges during the third quarter and first nine
months of 2006 totaled $0.3 million and $0.6 million,
respectively. We expect to incur future restructuring costs
associated with this activity of approximately $0.9 million
during the remainder of 2006.

During the fourth quarter of 2004, we announced and commenced
implementation of a restructuring and divestiture program
designed to improve future operating performance and position us
for future earnings growth. The actions have included exiting or
divesting non-core or low performing businesses, consolidating
manufacturing operations and reorganizing administrative
functions to enable businesses to share services. The charges,
including changes in estimates, associated with the 2004
restructuring and divestiture program for continuing operations
that are included in restructuring and impairment charges during
the third quarter and first nine months of 2006 totaled
$2.1 million and $9.1 million, respectively, and were
attributable to our Medical Segment. The charges, including
changes in estimates, associated with the 2004 restructuring and
divestiture program for continuing operations that are included
in restructuring and impairment charges during the third quarter
and first nine months of 2005 totaled $5.8 million and
$19.7 million, respectively. Of the $5.8 million, 23%
and 77% were attributable to our Commercial and Medical
segments, respectively. Of the $19.7 million, 17%, 67% and
16% were attributable to our Commercial, Medical and Aerospace
segments, respectively. As of September 24, 2006, we expect
to incur future restructuring costs associated with our 2004
restructuring and divestiture program of between
$2.8 million and $5.0 million in our Medical Segment
over the next three quarters.

For a more complete discussion of our restructuring programs,
see Note 4 to our condensed consolidated financial
statements included in this Quarterly Report on
Form 10-Q.

Discussion of growth from acquisitions reflects the impact of a
purchased company up to twelve months beyond the date of
acquisition. Activity beyond the initial twelve months is
considered core growth. Core growth excludes the impact of
translating the results of international subsidiaries at
different currency exchange rates from year to year and the
comparable activity of divested companies within the most recent
twelve-month period. The following comparisons exclude the
impact of the automotive pedal systems business, Sermatech
International business, European medical product sterilization
business and small medical business, which have been presented
in our condensed consolidated financial results as discontinued
operations.

Comparison
of the three and six months ended June 25, 2006 and
June 26, 2005

Revenues increased 4% in the second quarter of 2006 to
$682.6 million from $657.0 million in the second
quarter of 2005. This increase was due principally to core
growth. Revenues increased 3% in the first six months of 2006 to
$1.31 billion from $1.28 billion in the first six
months of 2005. This increase was due to an increase of 4% from
core growth, offset, in part, by a decrease of 1% from currency.
The Commercial, Medical and Aerospace segments comprised 49%,
32% and 19% of our revenues, respectively, for both the second
quarter and first six months of 2006.

Materials, labor and other product costs as a percentage of
revenues improved slightly to 70.3% in the second quarter of
2006 from 71.0% in the second quarter of 2005. Materials, labor
and other product costs as a percentage of revenues improved to
70.6% in the first six months of 2006 from 71.6% in the first
six months of 2005, due primarily to the benefits of our
restructuring initiatives and other cost reduction efforts and
the impact in the first six months of 2005 of certain inventory
adjustments resulting from the 2004 restructuring and
divestiture program. Selling, engineering and administrative
expenses (operating expenses) as a percentage of revenues
increased to 19.0% and 19.2% in the second quarter and first six
months of 2006, respectively, compared with 17.7% and 18.2% in
the second quarter and first six months of 2005, respectively,
due primarily to costs associated with the initial phases of an
information systems implementation program in our Medical
Segment, the impact of $1.0 million of legal and accounting
costs related to a proposed acquisition that we decided not to
pursue, a slower than expected recovery in our Medical Segment
performance and the impact of expensing stock options under
SFAS No. 123(R).

Interest expense declined in the second quarter and first six
months of 2006 principally as a result of lower debt balances.
Interest income increased in the second quarter and first six
months of 2006 primarily due to higher average cash balances and
more favorable interest rates compared to the prior periods. The
effective income tax rate was 21.20% and 24.48% in the second
quarter and first six months of 2006, respectively, compared
with 23.73% and 23.93% in the second quarter and first six
months of 2005, respectively. During the second quarter of 2006,
we decreased taxes on income from continuing operations by
$7.3 million, of which $6.4 million related to tax
balance sheet accounts that were incorrectly stated as a result
of discrete errors in our tax accounting analyses and
computations in prior periods. For a more complete discussion,
see Note 1 to our condensed consolidated financial
statements included in this Quarterly Report on
Form 10-Q.
Minority interest in consolidated subsidiaries increased
$0.8 million and $1.7 million in the second quarter
and first six months of 2006, respectively, due to increased
profits from our entities that are not wholly-owned. Net income
for the second quarter of 2006 was $36.6 million, an
increase of 26% from the second quarter of 2005, due primarily
to the lower effective tax rate in the second quarter of 2006
and the loss from discontinued operations in the second quarter
of 2005. Net income for the first six months of 2006 was
$65.7 million, a decline of 3% from the first six months of
2005, due primarily to the impact of the gain on the sale of the
Sermatech business in the first six months of 2005, offset, in
part, by the lower effective tax rate in the first six months of
2006. Diluted earnings per share increased 27% to $0.90 for the
second quarter of 2006 and declined 2% to $1.62 for the first
six months of 2006.

On December 26, 2005, we adopted the provisions of
SFAS No. 123(R), Share-Based Payment,
which requires the measurement and recognition of compensation
expense for all stock-based awards made to employees based on
estimated fair values. SFAS No. 123(R) supersedes
previous accounting under Accounting Principles Board, or APB,
Opinion No. 25, Accounting for Stock Issued to
Employees for periods beginning in fiscal 2006. In March
2005, the SEC issued Staff Accounting Bulletin, or SAB,
No. 107, providing supplemental implementation guidance for
SFAS 123(R). We have applied the provisions of
SAB No. 107 in our adoption of
SFAS No. 123(R).

SFAS No. 123(R) requires companies to estimate the
fair value of stock-based awards on the date of grant using an
option pricing model. The value of the portion of the award that
is ultimately expected to vest is recognized as expense over the
requisite service periods. We adopted SFAS No. 123(R)
using the modified prospective application method, which
requires the application of the standard starting from
December 26, 2005, the first day of our 2006 fiscal year.
Our condensed consolidated financial statements for the second
quarter and first six months of 2006 reflect the impact of
SFAS No. 123(R).

Stock-based compensation expense related to employee stock
options recognized under SFAS No. 123(R) for the
second quarter and first six months of 2006 was
$1.7 million and $3.3 million, respectively, and is
included in selling, engineering and administrative expenses.
The total income tax benefit recognized for share-based
compensation arrangements for the second quarter and first six
months of 2006 was $0.3 million and $0.6 million,
respectively. As of June 25, 2006, total unamortized
stock-based compensation cost related to non-vested stock
options was $11.9 million, net of expected forfeitures,
which is expected to be recognized over a weighted-average
period of 2.2 years.

Additional information regarding stock-based compensation and
our stock compensation plans is presented in Notes 1 and 9
to our condensed consolidated financial statements included in
this Quarterly Report on
Form 10-Q.

In June 2006, we began certain restructuring initiatives that
affect all three of our operating segments. These initiatives
involve the consolidation of operations and a related reduction
in workforce at several of our facilities in Europe and North
America. We have determined to undertake these initiatives as a
means to improving operating performance and to better leverage
our existing resources. The charges associated with the 2006
restructuring program that are included in restructuring and
impairment charges during the second quarter of 2006 totaled
$1.8 million, of which 27% and 73% were attributable to our
Commercial and Medical segments, respectively. As of
June 25, 2006, we expect to incur future restructuring
costs associated with our 2006 restructuring program of between
$6.4 million and $8.3 million in our Commercial,
Medical and Aerospace segments over the next four quarters.
During the second quarter of 2006, we determined that a minority
held investment was impaired and recorded a charge of
$3.9 million, which is included in restructuring and
impairment charges.

During the first quarter of 2006, we began a restructuring
activity in our Aerospace Segment. The planned actions relate to
the closure of a manufacturing facility, termination of
employees and relocation of operations. For the second quarter
and first six months of 2006, we recorded $0.1 million and
$0.3 million, respectively, of termination benefits that
are included in restructuring and impairment charges. We expect
to incur future restructuring costs associated with this
activity of approximately $1.2 million during the remainder
of 2006.

During the fourth quarter of 2004, we announced and commenced
implementation of a restructuring and divestiture program
designed to improve future operating performance and position us
for future earnings growth. The actions have included exiting or
divesting non-core or low performing businesses, consolidating
manufacturing operations and reorganizing administrative
functions to enable businesses to share services. The charges,
including changes in estimates, associated with the 2004
restructuring and divestiture program for continuing operations
that are included in restructuring and impairment charges during
the second quarter and first six months of 2006 totaled
$2.7 million and $7.0 million, respectively, and were
attributable to our Medical Segment. The charges, including
changes in estimates, associated with the 2004 restructuring and
divestiture program for continuing operations that are included
in restructuring and impairment charges during the second
quarter and first six months of 2005 totaled $6.7 million
and $13.9 million, respectively. Of the $6.7 million
and $13.9 million, 25%, 69% and 6% and 15%, 63% and 22%
were attributable to our Commercial, Medical and Aerospace
segments, respectively. As of June 25, 2006, we expect to
incur future restructuring costs associated with our 2004
restructuring and divestiture program of between
$6.0 million and $8.0 million in our Medical Segment
during the remainder of 2006.

For a more complete discussion of our restructuring programs,
see Note 4 to our condensed consolidated financial
statements included in this Quarterly Report on
Form 10-Q.